Anand Sharma with Nouri Kamil al-Maliki in New Delhi on Friday. Picture by Ramakant Kushwaha
New Delhi, Aug. 23: India is keen to explore payments in rupee for oil imports from Iraq to reduce its demand for dollars and cushion the rupee.
“We are exploring possibilities (of payment in local currencies — dinar and rupee) as we have substantial imports. We will definitely be discussing this issue,” commerce minister Anand Sharma told reporters here at an industry event.
Trade between India and Iraq stands at around $21 billion. India imported 24 million tonnes of crude from Iraq in 2012-13, second only to Saudi Arabia. Iraq toppled Iran as the second-largest supplier of oil more than a year back, following US and EU sanctions on the latter.
Payment in local currencies will help India to deal with the exchange rate volatility and the declining value of the rupee, which yesterday slipped to a lifetime intra-day low of 65.56 against the dollar.
India and Iran have agreed to deal in rupee trade to circumvent the payment issues created by the US and EU sanctions. Under that system, New Delhi places rupee-denominated payments in a bank here to pay for the oil. Funds are debited from that account when Iran purchases Indian goods such as grains, drugs, consumer products and auto parts.
The Iraqi Prime Minister assured industry that his government was aware of exchange-related problems.
“We are working to resolve the problem,” Prime Minister Nouri Kamil al-Maliki said while answering an industry representative who raised concerns about exchange rate losses.
“I invite Indian companies to invest in Iraq. There are great opportunities and wide avenues in different sectors,” he added.
Pharmaceuticals, health services, IT and auto components are the other areas where Iraq holds huge opportunities for Indian businesses, al-Maliki said.
Al-Maliki said Iraq had missed out on a number of opportunities during the years of dictatorship and wanted to learn from India’s experience and expertise.